Section 8 company can be regarded as the Non-profit organization. The rules for incorporation of Section 8 Company are specified in rule 19 and rule 20 of company (Incorporation) Rules 2014.
The various objectives of section 8 Company are the promotion of arts, commerce, charity, and education, protection of the environment, science, social welfare, sports, research and religion. In order to get registered as the section 8 company it is very mandatory that the company shall invest its profits, or any other income received only in promoting its objectives. Further section 8 company functions exactly like a limited company in respect of all the rights and obligations. However, one significant distinction between a company and section 8 Company is that it cannot use the words “Section 8” or “Limited” in its name.
In order to register a section 8 company it is required to fulfill the following requirements-
- At least two shareholders
- Minimum two directors(Shareholders and directors can be the same)
- At least one director shall be the Indian resident
- PAN card number.
- Identity proof
- Proof of residence(Electricity/telephone/mobile bill or bank statement)
- Passport size photograph
- In case of rented office premise No Objection Certificate (NOC) from the owner.
- Copy of rent agreement in case of rented premises.
Process of registering section 8 Company
Step-1 –Obtaining Director’s Consent
The applicant is required to collect the above-mentioned documents along with director’s consent in DIR-2.
Further, the applicant is required to apply for the Digital Signature Certificate which is required for filling the various forms electronically in the Ministry of Corporate affairs.
It is mandatory for every director to obtain the valid Director’s Identification Number from the Ministry of Corporate Affairs by filing Form DIR-3, in case the director does not have DIN.
Step-4 Applying for Company name
An application for obtaining an approval for the name chosen must be filed with MCA. While choosing a name an applicant must adhere to various guidelines as specified by MCA. Further, the applicant can give maximum six names in order of preference.
Step-5-Drafting MOA and AOA
As soon as the approval is received the Memorandum of Association and Article of Association shall be drafted. Further, it shall be sent to ROC along with other documents in e-Form INC 13 for the issuance of the license under section 8 of the Companies Act, 2013. The subscription pages of both MOA and AOA shall be signed by each subscriber of the memorandum.
Memorandum of Association- It is legal document that defines the relationship of the company with its shareholders. It describes the company name physical address of registered office, names of shareholders and the distribution of shares etc.
Article of Association- It is the constitution of the company.It contain all the information regarding who holds the power distribution among directors, officers, shareholders etc, who holds right of vote and veto, the nature and form in which the primary business of the company is to be carried out etc.
Step-6 Application for license under section 8
To incorporate a section 8 company the applicant is required to file an application in form INC 12 along with the prescribed fees to register for obtaining a license. Along with INC-12 following documents shall also be submitted-
1. INC-13 Memorandum of Association. Article of Association
2. INC-15 Declaration by each Subscriber to MOA (On Non- judicial stamp paper of Rs. 100/- and duly notarized).
3. Estimated Statement of Income & Expenditure for Next three years and it should be signed the proposed Promoters.
4. List of proposed Promoters and Directors of the Company.
5. Subscribers page (AOA & MOA) should be hand written by the Subscriber (s), and witness.
Step-7 Certificate of Incorporation
The incorporation documents in the FORM INC -7(containing the declaration of compliance with the requirements of the Act on application for registration of a company), INC 22(regarding notice of situation of registered office) and DIR 12(for appointment of directors of the company) along with the prescribed fees shall be filed by the applicant. In case registrar of the company is satisfied with the contents of the documents that are filed a certificate of registration will be granted in form INC-16.